The Duo Growth Company just paid a dividend of $4 per share. The dividend is expected to grow at a rate of 15% per year for the next 4 years and then level off to 5% per year forever. You think that the appropriate discount rate is 20% per year.

1) What is your estimate of the intrinsic value of a share of the stock?

2) If the market price of a share is equal to this intrinsic value, what is the dividend yield?

3) What do you expect its price to be 1 year from now? Is the implied capital gain consistent with your estimate of the dividend yield and the discount rate?